Qatar set to leave OPEC in January as Middle East spat worsens

Emir
of Qatar Sheikh bin Hamad al-Thani
Thomson Reuters

• Qatar will quit OPEC on January 1 after 57 years of
  membership.
• The decision was announced at a press conference Monday
  just days ahead of a crucial meeting on December 6.
• Oil prices have recovered in recent days on the back of
  a agreed Russian and Saudi supply cuts. 

Qatar, OPEC’s 11th largest oil member by production, shocked
market watchers with the announcement it will quit OPEC, adding
additional bite to proceedings ahead of a December 6 meeting in
Vienna, Austria.

While Qatar has stated the decision, effective January 1, is
thanks to its plans to increase natural gas production, it’s
clear its diplomatic spat with Saudi Arabia isn’t abating. 

OPEC largest member – Saudi Arabia – has cut trade and transport
ties with Qatar for the past 18 months, alongside three other
countries, accusing the country of supporting terrorism and their
regional rival, Iran. Qatar has said the boycott is damaging for
its national sovereignty and has denied the claims. 

After a 30% drop since October, crude prices had a respite with
5% surge on Monday following positive news that Russia and Saudi
Arabia agreed to cut production and shored up by news of a

90-day trade war truce between the US and China. Brent crude
was trading at $61.62, up 3.6% as of 9.30 a.m in London (4.30 a.m
EST) while WTI is up 4.1% at $53.06.

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“For me to put efforts and resources and time in an
organization that we are a very small player in and I don’t have
a say in what happens … practically it does not work, so for us
it’s better to focus on our big growth potential,” Qatar’s Energy
Minister Saad al-Kaabi told a news conference Monday, as

reported by Reuters. 

Qatar was the first country to join OPEC 57 years ago following
the group’s formation by five original members. It is, through
Qatargas, the world’s largest liquefied natural gas producer in
the world. The tiny gulf state exports over 77 million
tonnes of LNG annually, more than Malaysia and Australia
combined, with about 30% of
global market share.

“Qatar’s decision to exit OPEC over political disagreements with
allies could sour some of the bullish sentiment, though Qatar is
one of the smaller Gulf oil producers,” said Mike van Dulken and
Artjom Hatsaturjants of Accendo Markets. 

Al-Kaabi said Qatar Petroleum planned to raise its
production capability from 4.8 million barrels oil equivalent per
day to 6.5 million barrels in the next decade.

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